Texas electricity, explained

Fixed vs variable electricity in Texas: what actually matters in 2026

By JP Reilly, Growth · Published · Updated

In short

Texas banned the dangerous flavor of variable plans — wholesale-indexed products — for residential customers under HB 16, effective September 1, 2021³. The Griddy-style $5,000-bill exposure of Winter Storm Uri² is no longer something a retail-electric customer can sign up for. What remains is fixed-rate plans (most contracts) and REP-set month-to-month rates (the auto-renewal default if a fixed term lapses). The real comparison for a 2026 Texas household is not fixed vs variable. It is which fixed shape — 12-month or 24, flat-rate or bill-credit, with or without battery — survives an ERCOT summer where 45% of annual usage runs in four months.

What "fixed" and "variable" actually mean today

A fixed-rate plan locks the energy portion of the price — and most of the per-kWh delivery pass-through — for a stated term, typically 12, 24, or 36 months. The TDU charges underneath (Oncor, CenterPoint, AEP, etc.) can move when those utilities file new rate cases, and the plan's contract spells out how those changes flow through.

A variable-rate plan in Texas, in 2026, is one of two things. The first is a month-to-month plan where the REP sets a new rate each cycle — these still exist, mostly as the auto-renewal landing spot for fixed-term plans that have ended. The second — wholesale-indexed plans where the customer paid the live ERCOT spot price — is illegal for residential customers under Texas Utilities Code §39.110, the codification of HB 16³.

The legislative trigger was specific. During the five days of Winter Storm Uri, ERCOT spot prices were administratively pinned at the $9,000/MWh ceiling. Customers on Griddy and similar wholesale-indexed plans saw five-day bills run $5,000 to $9,000². HB 16 didn't outlaw "anything that varies" — it outlawed the specific plan structure that exposed retail customers directly to the wholesale market's worst day.

The four-month problem

Texas residential electricity is a four-month problem disguised as a year-round one. From May through September, a typical Round Rock household pulls roughly 5,900 kWh — about 45% of the annual total in a third of the year⁷. Cooling load drives the math: July and August averages near 95°F mean air conditioning runs hard for months, and modeled household usage swings from 630 kWh in April to 1,625 kWh in August.

That seasonality is what makes "average rate at 1,000 kWh" a poor single-number benchmark. A plan that looks great on the EFL's 1,000-kWh column can be sharply worse at the 1,500-2,000 kWh range a Texas summer actually produces. The plan you pick gets graded on July and August, not on April.

The fixed-rate question is not "does fixed beat variable on average?" The interesting question is whether your chosen fixed shape survives August at 2,000 kWh without the bill structure going sideways.

When fixed makes sense, when variable might

Fixed-rate plans suit you if…

  • You want a predictable monthly bill — not the lowest possible bill in any single month, but a known one.
  • Your usage is summer-heavy (almost any TX single-family home with central A/C qualifies). The structural protection against an ERCOT-spike-era price reset is worth real money.
  • You're staying put for at least the contract term. The early-termination fee (ETF) is the math that makes "switch early" expensive.
  • You don't want to think about your power bill more than once a year. A fixed term ends; you re-shop; done.

A variable / month-to-month rate fits if…

  • You're moving inside a 2-3 month window and the ETF on a fixed-term plan would exceed the rate premium.
  • You're already in default month-to-month after a fixed term expired, and you're actively shopping right now — the variable rate is a transit lane, not a destination.
  • That's basically the list. Long-term variable as a deliberate strategy almost never pencils in 2026; the wholesale-indexed version that used to be cheap on average was banned³, and REP-set variable rates are typically priced as the penalty box for customers who haven't re-shopped.

If you read "variable can be cheaper on average" anywhere on the Texas internet, check the citation. It was true in some pre-Uri years for a specific plan flavor that no longer exists.

The Base wedge: fixed rate plus a battery

A retail rate — fixed or variable — is one half of the price-risk question. The other half is the wires-side exposure: a multi-day outage during an ice storm or a derecho costs the household real money in spoiled food, hotel nights, and missed work, even if the rate stays locked.

Base Power's argument for Texas households on Oncor's wires (and, in a coming market, CenterPoint's) is that those two halves should be sold together. A fixed retail rate caps the price-side risk; a residential battery enrolled in Base's Virtual Power Plant (VPP) caps the outage-side risk. The same hardware that powers your home during a major-event-day outage earns revenue on normal days by dispatching into ERCOT — that revenue keeps the bundled product cheaper than buying the battery separately.

This is not a claim that fixed-rate plans need a battery to make sense; many Texas households do fine on a clean 12-month fixed without one. It's a claim that the structural answer to ERCOT exposure has two halves, and most of the market sells you only the first.

Plan-shape checklist before you sign

Five questions to ask of any Texas fixed-rate plan, every one answerable from the Electricity Facts Label (EFL) without calling the REP:

  1. Are the 500-, 1,000-, and 2,000-kWh averages close to each other? A flat plan stays close across the row. A plan that's sharply low at 1,000 and high at 2,000 is engineered for a household who lands on the bill-credit threshold every cycle — and produces ugly bills the months it doesn't.
  2. What does the renewal section say? Auto-renewal to a month-to-month variable rate is the default if you do nothing. The REP must give you 60-day and 30-day notices⁹; set calendar reminders matching those windows.
  3. What's the early-termination fee? Numbers from $20/month-remaining to $295 flat are common. If you're a might-move household, the ETF is the math that decides whether a 24-month is actually cheaper than two 12-months.
  4. Is the renewable-energy percentage the marketing number? "100% renewable" claims are accounted for via retired Renewable Energy Certificates. The EFL discloses the actual percentage; if a plan markets "100% green" but the EFL shows 85%, the marketing language is wrong.
  5. Who's the TDU? The plan's per-kWh delivery pass-through depends on which utility runs the wires — Oncor, CenterPoint, AEP, or a smaller co-op. Two identical-looking REP plans can land different on the bill if they're priced for different TDU territories. The address widget on any city page confirms yours.

The reframe

The "fixed vs variable" question Texas households needed answered in 2018 isn't the question they need answered in 2026. The dangerous variable flavor was outlawed; the leftover variable rates are mostly default landing pads for expired contracts.

The question worth reading an EFL for: which fixed-term shape survives a Texas summer at the household's actual usage, and what — if anything — the household has at the meter to backstop a multi-day major event. The contract handles price risk; a battery handles outage risk; the EFL is the document, not the marketing page.

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Frequently asked questions

  2. Is a fixed-rate plan always cheaper than variable?

    Not always, and the comparison is rarely live in 2026 — most Texas households who hold a variable rate are doing so by accident, because their fixed term auto-rolled. The relevant comparison today is between fixed-term plans of different shapes: 12-month vs 24-month, bill-credit vs flat-rate, and so on. Variable becomes the penalty box, not a deliberate strategy.

  3. What term length should I pick?

    61% of 2025 Texas shoppers picked 12-month plans (up from 53% in 2024)⁵. The 12-month default exists because it lines up with one full ERCOT summer + one full winter — the household has lived through a complete weather cycle before its renewal decision. 24-month plans lock in a longer hedge against rising forward prices but remove the optionality of re-shopping when ERCOT supply tightens. 36-month is for households who want a single decision and a paid-off rooftop or battery to ride out anything the rate covers.

  4. How are fixed-rate plans different from one another?

    The big axes: (1) flat per-kWh price vs bill-credit at a usage threshold; (2) renewable-energy match percentage; (3) early-termination fee size and graceful-exit terms; (4) auto-renewal logic and notice window; (5) deposit policy. The EFL discloses all of these⁹. Two "12-month fixed at 14¢" plans can land $30/mo apart on the same household once the structure clears.

  5. What happens if my rate "fixed" plan expires and I do nothing?

    You roll to a default month-to-month rate set by your REP. By rule, your REP must give you written notice 60 days before the term ends and again 30 days out⁹. Set a calendar reminder; the rolled rate is almost always materially worse than what you can find by re-shopping.

  6. Did Winter Storm Uri raise rates for fixed-rate customers?

    Not directly during the event — fixed-rate customers paid their contract rate. The cost showed up indirectly through ERCOT debt recovery (securitization), which lifts a small per-kWh charge into the system for years². But the comparison the headlines made — Griddy customers paying $5,000-$9,000 bills during five days of the storm² — that exposure was specific to wholesale-indexed plans, which are now illegal for residential customers³.

  7. What does ERCOT's 2026 summer outlook say about price risk?

    ERCOT's May 2025 Capacity, Demand and Reserves report forecasts a 17.2% reserve margin for summer 2026 — up sharply from the 5.2% in the December 2024 forecast⁶. The improvement comes from new solar+battery additions and updated load forecasting. Wholesale spike events are still possible at the deep tail (a 100°F+ heat dome with a forced-outage on a major thermal plant), but the baseline summer-2026 risk is meaningfully better than 2023-2024.

  8. Where does battery / VPP fit into this?

    A residential battery answers the same exposure a fixed-rate plan answers, but at the meter rather than in the contract. During a price spike or grid event, the battery powers your home from stored energy; during a normal day, it can earn revenue dispatching into ERCOT through a Virtual Power Plant (VPP) enrollment. Base Power's wedge is selling these as a bundle: fixed retail rate + battery + automatic VPP enrollment.

Sources

  1. EIA — Texas residential retail rate (Sept 2025: 15.84¢/kWh; 2.5% increase month-over-month)Retrieved
  2. Texas Comptroller — "Winter Storm Uri 2021" fiscal-impact analysis (4.5M customers without power; ERCOT debt recovery / securitization)Retrieved
  3. Texas Utilities Code §39.110 (HB 16, 87th Leg.) — Wholesale Indexed Products Prohibited for residential and small-commercial customers, effective 2021-09-01Retrieved
  4. KERA News / KXAN — coverage of Griddy bills during Winter Storm Uri ($5,000-$9,000 over five days for some customers)Retrieved
  5. ElectricityPlans.com — Texas Electricity Shopping Statistics, Annual Review 2025 (61% of shoppers picked 12-month, up from 53% in 2024; 75% picked ≤12-month contracts)Retrieved
  6. ERCOT — Capacity, Demand and Reserves (CDR) Report, May 2025 (Summer 2026 reserve margin forecast 17.2%, vs. 5.2% in December 2024 CDR)Retrieved
  7. NOAA NCEI Climate Data Online — Texas residential cooling-degree-day load profile (May-Sept dominance)Retrieved
  8. EIA RECS 2020 — Residential Energy Consumption Survey, West-South-Central census divisionRetrieved
  9. PUCT Substantive Rule §25.475 — Information Disclosures to Residential and Small Commercial Customers (EFL, term-end notice requirements 60+30 days)Retrieved
  10. Texas Tribune — "Texas Legislature approves bills to require power plants to 'weatherize'" (SB 3, weatherization mandate)Retrieved